Before you try to defy market odds by breeding, know the challenges you face, and how successful small breeders are meeting them.
BY DEBBIE MOORS
Let's say you have an interest in breeding horses, and that you fit our definition of a small breeder—someone whose crop consists of four or fewer foals a year. You know the economy's in tough shape, and that the horse market itself is down, but you also believe, unapologetically, that you have what it takes to breed a desirable horse.
So what new realities do you face, how do you meet their challenges with agility, and how can you position yourself for success?
For answers, we spoke with equine marketing expert Elisabeth McMillan of Lewisburg, Tennessee,,and also with horsemen across five breeds (Appaloosas, Arabians, Paints, Quarter Horses, and Rocky Mountain Horses). We asked for their perspectives, strategies, and advice tailored -to small breeders. Here's what they had to say.
A Flooded, Smaller Market
McMillan, of equestrianprofessional.com, works across the industry. She's been both a professional rider and a small breeder, and she helps horsemen create marketing plans for their businesses.
"The biggest challenges we see for small breeders is the shift in the market and the overall economy," McMillan says.
In part, that market shift is a reflection of generational differences and going from the huge baby boomer group to the much smaller generations that followed. There are just fewer people able to keep horses, and a far more ur-
ban population, than in the past. (See sidebar, "Roller-Coaster Ride," page 42.) Plus, the horse world is challenged by changes in how adults, youths, and families use their time. That's a new reality all horse professionals are facing.
But McMillan sees some market changes and challenges specific to small breeders as well.
One is that breeders aren't selling as many horses because breeders aren't buying as many horses. "Breeders aren't able to sell stock to other breeders," McMillan -says. "The economy changed, and people stopped adding to their herds."
And, as many breeders were going full speed before the market dropped, there's a glut in the market—and not just a glut of low- to middle-end horses.
"The market became flooded with well-bred horses," McMillan asserts. "And larger breeders have always had an advantage in terms of farm traffic—someone looking for a horse would rather go to one large farm and look at 30 prospects, than to a small farm to look at one."
Another big factor in a small breeder's ability to compete has to do with making careful decisions based on the market.. If you breed casually, without studying the market—and its demands—you'll add not just to your own headaches, but also to the issue of unwanted horses that's plagued the industry in recent years.
So what's a small breeder to do? McMillan says that breeders need to keep their eyes wide open and closely focused on the industry and the market, and to use every tool at their disposal. Take a look at these 10 strategies for facing the market's new realities.
Breed the Best, Not the Most
Every breeder we spoke with bred fewer mares this year in response to changing market demands. And each emphasized the importance of breeding the highest-quality horse you can, paying attention to the rules of supply and demand, not only from a business standpoint, but also from an ethical standpoint.
Linda Tacklind of TS Paints, of San Martin, California, is the breeder of Ratta Tat Tat, a mare who is the foundation for her breeding program and has been on the American Paint Horse Association's leading dams list since 2003. Linda's program has produced 14 foals over the years, and 12 are in training with her daughter, Melissa Sachs.
Linda chose to breed just one mare this year, rather than the two to three mares she'd bred in past years.
"We've been able to sell our horses," she says, "but I want to keep our horses in show homes and maintain what I've been breeding for." That decision to scale back is a direct response to the down market.
For some breeders, the down market also means evaluating their breeding stock with a critical eye. Roger Gollehon of Gollehon Quarter Horsesin Versaille, Kentucky, stands Quarter Horse stallion Good Cowboy Margarita, National Snaffle Bit Association Horse of the Year. As a stallion owner, Gollehon works with a wide range of breeders, from owners who have one mare, to those breeding multiple mares.
"If a breeder has three mares that produced average foals, I would tell him or her to sell those mares and get one really good mare," says Gollehon, pointing out that a breeder's expenses will be lower (with one mare and. foal) and the foal's quality and marketability will be higher.
Ron Hatcher, president of the Rocky Mountain Horse Association and a Bowling Green, Kentucky, breeder who focuses on preserving and promoting the breed, points out that if you can't afford to breed high-quality horses, you may want to reconsider breeding at all.
"Buy the absolute best stock that you can afford. If you cannot breed horses that are recognized as well above average, consider enjoying your horses as a non-breeder," he advises.
"I think horse persons have to breed responsibly—the market tells you to follow supply and demand, and if you don't do that, then you must have the financial wherewithal to support those horses," says McMillan.
Do Your Homework
David and Inez Smith own Flatcreek Quarter Horses in Powhatan, Arkansas, have been breeding Quarter Horses for about 10 years. They run a commercial cattle-breeding operation on their 300 acre ranch, and breed about three mares each year. The Smiths carefully research bloodlines, then make informed breeding decisions based on what they've learned.
"You need to be a conscientious breeder" David says. That means being intentional about breeding a quality horse that will have a place in the market.
"We do research online and talk to breeders who've been in the business for a long period of time," Inez says. "We talk to the long-time people in the industry who know bloodlines and how those bloodlines matched up, we watch videos on stallions to see how they move, and we talk to stallion owners."
Ron Hatcher adds, "It's rewarding to someone to purchase a horse knowing that it was not bred casually."
Know the Risks and Tough Truths
As a third-generation horseman, Gollehon knows the inherent economic risks of breeding horses. "About 70 percent of I mares that are bred have foals. So if you have one mare, odds are there will be three out 10 years you won't have a foal. Of those seven foals in 10 years, you'll have about 30 to 40 percent that go on to the show pen.
"If I raise six babies a year," he continues, "I may price one at $2,000, one for $20,000, and most for $10,000. I'm willing to give up that one baby for $2,000, because I know that's what he's worth, even though I might have $4,000 invested in him. That's the risk you take."
The market requires breeders to price their horses realistically. But making the price realistic can be strategic not only in the short term (getting the horse sold), but also for your program in the long run.
"Be realistic about the amount you're going to market that baby for," Tacklind says. "I give an incentive to a home where I know those horses are going to succeed."
If you aren't a trainer, you also need to consider the cost of investing in training and selling a horse when it's older.
"I have my yearlings this year priced like my weanlings. I'd rather sell for less than invest in training, so selling these horses younger makes sense," says Ann Jentz of South Bend, Indiana. Jentz, who began breeding Appaloosas in the '80s, has a small-breeder program that's produced 21 Appaloosa Horse Club bronze medallion winners and one silver medallion winner out of 50 foals.
"The breeders I see making it in the market stay closely in touch with the sport they're involved in," says consultant McMillan. "They have an eye to the future all the time, and they're thinking about what kind of horse is winning in the show ring. They forge bonds with other professionals who, hopefully, will buy horses from them.
"It's really easy to become isolated when you're a breeder," she continues. "It's comfortable sometimes to just disengage—we' dprefertojuststay with our horses and not think about it. But it's very important to be involved in your equestrian community." That includes knowing your stallion's owners, says David Smith. "Have a good relationship with your stallion owners because they'll want to help promote their stallion's offspring. That's an avenue for marketing."
Facebook. Twitter. YouTube. Linkedln. While some changes in the business have made life tougher for small breeders, use of social media is a trend worth embracing. "It's something we weren't focusing on 10 years ago," says Inez Smith. "We had a cow-bred stallion, and neverhad to advertise to sell a horse. People would see the sign on the road, and they'd stop by. Now we're working on a Web site, and technology has come so far. With Face-book and Twitter, there are all kinds of things you can use to help advertise."
McMillan agrees. "Social media is a huge equalizer for small breeders," she says. "It levels the playing field so far as marketing and enables breeders to go out there and make relationships.
"I see breeders on Facebook posting pictures of newborn foals, having foal-naming contests, setting up webcams and doing a mare watch while their whole audience is waiting with bated breath for that foal," McMillan adds. "Breeders can build excitement and relationships through social media."
Find Your Niche
Originally, the Smiths planned to breed horses they could use for ranch work. But some careful consideration and research changed their plans.
"There seems to be an overabundance in that market. The Western pleasure industry seemed more stable," David says.
"That's exactly how you have to think about it," states McMillan. Really knowing the market and finding your place in it pay off, because you're breeding purposefully for a specific, in-demand horse.
"People need to think about why they're breeding," says Ann Jentz. "In Appaloosas, all-around horses are still bringing big dollars. If you have a horse that can do multiple events for a youth, you can sell it, and sell it for a lot."
Leslie Hammel-Turk of Turk Arabians in Las Vegas, New Mexico, began breeding Arabians in 1980. She's a professional trainer who worked with Ray Hunt, and she's focused primarily on Russian-bred Arabians to produce horses that are, physically suited to both vaquero-style riding and dressage. Her niche is unique and specific, and while high hay prices and the market have had a dampening effect, she's still pursuing the type of horse she likes to breed for.
"In some regards, I haven't seen a huge change in my market because I'm in such a unique position," she says. "In the Arabian breed, two of the strongest areas are probably the working Western horse and the sporthorse. I learned from horsemen like Ray Hunt and Tom Dorrance, and selected a young stallion many years ago before he sired anything."
The stallion she chose proved to be a strong progenitor of the type she was breeding for, and she's remained consistent in her breeding goals for her niche.
"It's easier for me to sell a horse that's one of a few than one of many," Jentz points out. Differentiating your horses, and making sure they have something unique or compelling, can make a big difference in a down market.
Hammel-Turk sees that as staying true to your niche. "I think there's something to be said for breeding the type of horse you want, and not breeding for fads. In my breed in particular, it seems like horses have virtually identical pedigrees because they're all breeding to the latest, greatest stallion."
Gollehon points out that having confidence in the course that you set—and. the stallions and bloodlines you choose after careful consideration—can pay off down the road. "One of the things a lot of small breeders do is change a lot. They breed to the hottest horse out there, and get caught up in the trends."
Another way to increase marketability for your foals is to invest in them where you can. Linda Tacklind points out that paying your foals into incentive programs like breeder's futurities helps increase marketability while giving new owners incentive to show—which in turn helps your breeding program as a whole.
"A young-woman amateur recently bought my yearling (paid into the APHA Breeder's Futurity). One of her reasons for buying one of our horses is because she knows it's going to help pay for itself," she says.
Have a Business Plan
Ron Hatcher is in a unique market with Rocky Mountain Horses. The associations membership is growing, and the aging baby boomer market often seeks out gaited horses. But as with most other breeds, the number of mares being bred has slowed, and he's responded to the market accordingly by breeding fewer horses. Hatcher points out that every breeder needs to have a business-plan based on the market and the costs of doing business.
"How well do you know your market? Are you prepared to market your horses?" he asks. "Will you cut prices to the bone if the market plummets? How many horses can you feed and train if things slow down?" They're questions you need to answer as part of your overall plan.
Business plans are simply part of savvy business practices, but they're even more critical in a down economy.
McMillan surveys equine professionals annually, and says that last year professional horsemen saw growth with new customers.
"But horsemen also reported profitability had gone down," she says. "That was because they had a decrease in the number of horses sold and a decrease in number of customers showing." McMillan says that the bright spot— seeing newcomers getting into horses— won't necessarily help breeders who have younger stock right now, because new riders are looking for more mature, broke horses. Still, it's a positive indicator.
So how do breeders plan for next year? This year—as with the economy
in general—McMillan says it looks like there may have been a "double dip"— a drop after a little growth. Because of that possible double dip, McMillan says breeders may want to hedge their bets.
"If I were in their shoes," she says, "I'd probably come up with two different plans for 2012—one plan to use if the year finishes on an upswing, and another plan if things are still down."
Think a Few Years Ahead
While most breeders interviewed say things look pretty dark this year, most also believe that there will be an upturn. Predicting when that will happen is difficult, and adjusting to economic ups and downs is tough when you're breeding horses.
"Generally, breeders stop breeding too late and start breeding again too late. You need to be two to three years ahead," McMillan says.
McMillan adds that this is one area where small breeders have an advantage over larger operations, because they can be more agile. "I saw some big breeding operations close last year with stock liquidations, whereas the small breeder may be able to hold on to a horse and sell it down the road as a trained 3-year-old."
Love What You Do
"The whole industry is under pressure, not just small breeders. It's not for the faint of heart," says Appaloosa breeder Jentz. "If I didn't love horses and they weren't such a passion, I'd have bolted five years ago."
Most of the breeders we spoke to have full-time jobs or are retired. They're breeding horses because they have a passion for it, and that's what gets them through the most difficult times.
For Hammel-Turk, it's about breeding horses she loves to ride. "It's always been about breeding this ideal horse in my mind's eye—the combination of aesthetic beauty and high-level ability for the physical rush that we horse lovers get when we're riding," she says.
"We take lawn chairs out and watch the foals," Hatcher reveals. "They feel so good that it makes us feel better. And beyond that feel-good sensation, there's pride. You picked out that mare, chose to breed to that stallion, and you are invested by choice in that foal." ■